Selling Apples Online

If Jobs surprised the audience here with the fiscal first-quarter
profits announcement, even more fascinating was how Apple made it to black ink.

Three things added up quickly. Leaner
operations, the G3 Macs, and traditional sales channels pepped up by the CompUSA
Apple-store-within-a-store concept. But the fourth may have been the biggest factor: the
Web. Over a third of its $ 1.6-million revenue-and about half the 132,000-high margin, new
G3 Macs that it sold-happened at Apple’s direct-sales web site, launched November 1997.
That’s nearly 70,000 high-end Macs that sold through http://store.apple.com, in less than
two months.

Talk of surprises: the hoity-toity Apple
competing with the likes of Dell, and even taking pages from their sales and marketing
books. The online Apple Store clearly lists, describes, and shows the spectrum of Apple
products and their end-user pricetags, which match street prices. It lets users customize
their Macs: choose memory, network cards, CD, and Zip drives, instantly calculating the
correct price totals. It then lets US buyers commit the order, paying online by
credit-card for next-day delivery.

The web site, one of the best-organized
online stores there, is playing a bigger role than what even the revenue pie suggests.
Many users don’t order online. At the Apple Store, they ‘build their Macs’ and put
together their custom orders, taking a printout to their local dealer. The transaction is
then fast, clear, and with similar prices across the US.

This means that http://store.apple.com is
used outside North America too, though it is now "open for sales" only to users
in this region. Around one-fifth of the hits come in from Asia. Some are merely browsing
around the most complete and updated Apple Store there is. They might find something they
like; the next time they buy locally, the web information could help them buy a Mac.
Others use it to plan their purchases and put together their local orders, again getting a
rough idea of their prices.

The hits from Asia are a ‘revelation’, and
Apple’s Jeff Martin says that the Apple Store would open for sales to Asia-Pacific markets
between summer and fall this year. Not everywhere, because of currency convertibility,
custom tariffs, and delivery issues, all of which plague India. Among the likely first
candidates: Japan, Australia, Singapore, Hong Kong, and possibly China.

But other Apple regions, including India,
would do well to look at the US experience: the Web visitor who does not buy online could
be an offline buyer aided by that web visit. A consistent and updated source of local
prices for standard models and custom specs would be a very new and pleasant experience
for the Indian buyer. An India-price-translated version of the Apple Store could be one of
the several things Apple will need, to stop even its traditional core markets from
slipping away to Wintel. That window-shopping visitor might just see something he really
likes, and if that helps divert him from ‘Windows-shopping’, the web store would have
served its purpose.

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